Economy Watch: AIA Index Surges Upward
- Jun 23, 2016
Spurred by a still-active multifamily market and solid levels of demand for new commercial and retail properties, the American Institute of Architects’ latest Billings Index accelerated to its highest score in nearly a year in May. The index came in at 53.1, up sharply from 50.6 in April. This score reflects an increase in design services (any score above 50 indicates an increase in billings).
Also, the new projects inquiry index was 60.1, up from a reading of 56.9 the previous month. Both indexes are leading economic indicators of construction activity, reflecting the roughly nine- to 12-month lead time between architecture billings and construction spending. An uptick in architectural work thus predicts one in construction (in early 2017, in this case).
The indexes are derived from a monthly “Work-on-the-Boards” survey that’s sent to a panel of AIA member-owned firms. Participants are asked whether their billings increased, decreased, or stayed the same in the month that just ended, as compared to the prior month, and the results are then compiled.
“Business conditions at design firms have hovered around the break-even rate for the better part of this year,” said AIA Chief Economist Kermit Baker. “Demand levels are solid across the board for all project types at the moment. Of particular note, the recent surge in design activity for institutional projects could be a harbinger of a new round of growth in the broader construction industry in the months ahead.”